The global smartphone market has slowed from its boom years to a more modest but still significant growth. With mature markets becoming increasingly dependent on replacement purchases rather than on first-time buyers, the industry is shifting its attention to emerging countries in Asia, Latin America, and Africa, where much of the population either does not own a mobile phone or has yet to move from feature phone to smartphone.

Although Samsung and Apple remain the leading smartphone suppliers globally, their market share is being eroded by lower-priced phones, mainly from China. Moving beyond their vast domestic market, several Chinese brands are expanding internationally, especially to India and Southern Asia.

A major threat to the smartphone business arises from the limitations of the mobile broadband infrastructure. The mobile industry can develop incredible new applications and services - but if the infrastructure cannot handle the capacity, there will be little use for them. The developed markets in particular are eating up new spectrum with a voracious appetite.

The industry is of course attempting to address the infrastructure issue, with recent attention being given to 5G technology. However despite this widespread interest in 5G for the future; it is LTE which is making enormous inroads today.

In 2016 there are well over 1 billion LTE subscribers worldwide and LTE-A has become a key focus for the operators. In early 2016 there were already over 116 LTE-A networks deployed worldwide. In addition VoLTE deployments have also increased rapidly and by the end of 2015 there were 40 deployed around the world.

Key developments:

In 2016 there are expected to be just over 2 billion handset shipments worldwide.

1 out of every 3 operators is investing in LTE-A technology in 2016.

Asia Pacific is the leading region in terms of LTE subscriptions with over 50% market share.

In common with other mature markets, there remain a high proportion of mobile subscribers on 3G plans in Australia. However, this sector is diminishing in line with the greater reach of LTE networks and a wider range of cheap LTE-enabled smartphones.

China, USA and India are the world’s largest smart phone markets.

In South Africa, the network operators are increasingly forced to find innovative ways of distinguishing themselves from competitors in order to acquire and retain customers, and to streamline their operations.

Brazil is home to more than one third of all mobile users in Latin America and the Caribbean. The four major mobile companies – Vivo, Claro, TIM Brasil, and Oi – have secured spectrum in the 2.5GHz band for LTE services, and are rolling out networks at a considerable pace in an effort to gain subscribers and secure revenue from mobile data services.

Exhibit 23 Australia - background information on the 3G race by the MNOs

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